By Colin Barr
June 2, 2011

Anyone who isn’t investigating Goldman Sachs, please stand up.

The Manhattan district attorney’s office joined the fray Thursday. Bloomberg reported Cyrus Vance Jr.’s office has subpoenaed Goldman (GS) over its alleged bubble-era habit of ripping off hapless clients on dodgy mortgage bond deals.

The subpoenas stem from the report Sen. Carl Levin issued six weeks ago, documenting the bubble-era abuses at Goldman and Deutsche Bank (db). The Securities and Exchange Commission and the Justice Department are already investigating Goldman over that report, which showed how Goldman exploited its supposedly valuable customers for the sake of bonus-padding profits.

When it comes to sleuthing out crimes in the mortgage meltdown, obviously, the more the merrier. A year ago Goldman coughed up $550 million to settle an SEC case on its misleading marketing practices, so it is certainly plausible that there is a criminal needle somewhere in the Goldman haystack.

But what’s a little hard to figure is how prosecutors in Manhattan expect to bring a case based on the Levin report, when Levin himself made it clear that he thought the strongest case against Goldman was a charge that Lloyd Blankfein et al. misled Congress.

Lying to Congress, of course, is a crime. But it is not a crime the Manhattan district attorney has the jurisdiction to bring.

That seems to leave Vance’s office in the same boat as everyone else these last few years, thrashing about in a sea of ugly but not quite incriminating documents, looking for a case to bring against the firm and its executives for failing to do right by its clients. That is a nasty way to do business but it is not, at last glance, a crime — which is part of why there have been no perp walks of note so far from the crisis.

“It’s great that they are ready to prosecute to the full extent of the law, but this looks like a nonstarter in many ways,” says Anthony Sabino, a Long Island lawyer who teaches at St. John’s in Queens. “If you didn’t know any better you might think it was an ambitious politician looking to bolster his fortunes for the next election.”

It says something about Goldman that it portrays subpoenas as part of its new normal. “We don’t comment on specific regulatory or legal issues, but subpoenas are a normal part of the information request process and, of course, when we receive them we cooperate fully,” it says. This despite the 2% drop Thursday in its stock, which is now down 20% for the year.

And in that regard the worse, the better: If Goldman stock keeps falling, maybe management will do something drastic and start carving the firm up in a belated bid to add shareholder value and stuff. Purely unintentionally, that could end up reducing the bill the next time we have to bail out our ridiculous financial sector.

But clearly that bet is still a long shot — as is the wager that Vance will be able to close this case by putting rich guys in handcuffs.

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